Chapter 7 Flashcards
Change is
any alteration in the internal or external environment.
Organisational change is the
adoption of a new idea or behaviour by an organisation, resulting in a difference in the form or operation of an organisation over time.
Organisational change can include:
modified corporate culture
recruitment of new employees with new skills
developed different work practices
To be proactive is to
initiate change rather than simply to react to events.
To be reactive is to
wait for a change to occur and then respond to it.
Change must:
- Occur at a pace that allows organisations to absorb and integrate them into their operations
- Be evaluated thoroughly to assess their overall impact
- Be managed carefully or it may result in employee resistance, tension, anxiety, lost productivity and ultimately, unmet objectives
- Involve some risk and so requires sound leadership skills and responsive management structures
Sources of change refers to
where the change comes from, which includes changes from both the internal and external (operating & macro) environments.
The Internal Environment includes
the factors of an organisation that the business has direct control over.
The operating environment refers to the
external factors with which the organisation directly interacts with in the court of conducting its business. That is, it contains groups without whom a LSO could not operate OR those who must be considered before decisions are made.
The macro environment is made
up of the broad factors in the economy and society within which the organisation operates. Organisations have no control or influence.
A macro pressure are
are broad factors outside an organisation’s control and will impact on most businesses.
Kurt Lewin developed a model to understand the change, process. He came up with the concept of the force-field analysis,
which determines forces that drive and forces that resist a proposed change.
Driving forces are those forces that
initiate, encourage and support the change. The main driving forces for organisational change are changes in the internal and external environments.
Restraining forces are those that
work against the change, creating resistance. The current conditions, or status quo, result from these two forces ‘pulling’ in opposite directions.
Organisational Inertia refers to
the tendency of an organisation to be unenthusiastic to proposed change.
The main financial costs of change include:
Purchasing new equipment
Redundancy payments
Retraining the workplace
Reorganising plant layout
The change management process is
the sequence of steps that a manager would follow for the successful implementation and adoption of change.
Low risk strategies involve
a participative approach to the implementation of changing, involving the use of communication, empowerment and work groups and support for those who are impacted.
Participation and TeamWork (Change Agents)
a person or group of people who act as catalysts, assuming responsibility for managing the change process.
High-risk strategies involve
an autocratic approach to implementing change, involving the use of force, manipulation, cooptation and threats. Their failure may generate a negative outcome. They are not a desirable method of change management as it can create distrust, low morale and damage to the corporate culture.
Globalisation is the
movement towards the expansion of economic and social ties between countries through the spread of corporate institutions.
The 4 Globalisation Drivers are
Trade
Communication and Technology
Migration
Culture.
Leadership is the
ability to influence and motivate individuals to achieve organisational objectives.
During times of change, a successful leader will need to
- market and promote the change in a manner that will achieve cooperation and acceptance
- resolve conflicts, which often arise when change is implemented
- show confidence in people, share credit and recognition
- keep an open mind, seek out new ideas and freely share information.
Transformation change often results in
a complete restructure throughout the organisation. A transformed organisation will have a different organisational structure, new work systems and procedures, a changed employee structure, greater use of technology and an altered corporate culture.
Incremental change results
in minor changes, usually involving only a few employees.
For example, an office may change from using fax to using email when sending information to customers.
Structural change refers to
changes in the organisation’s structure - that is, the organisation chart.
Structural Change:
Outsourcing
Flat Structures
Work teams
Areas of an organisation that are often impacted by change include:
- Organisational Structure
- Change in the Corporate Culture
- Human Resource Management
- Operations
Employees (Internal Environment)
- Expect to be paid to be paid fairly, trained properly and treated ethically in return for their vital contribution to production.
- Disgruntled employees may desire a better working environment.
- Employees working in an innovative environment, where ideas are shared and acted on, are likely to recommend changes to policies, production processes or products.
Corporate Culture (Internal Environment)
- If Corporate Culture is preventing an organisation from achieving its strategic objectives, then it needs to change.
- Corporate Culture can also drive an organisation to embrace new behaviours.
- Recognising what culture is required in order to achieve success is crucial if change is to occur.
Policies (Internal Environment)
- Policies are often updated because of a change in legislation or the introduction of a new law, requiring the organisation to comply with these requirements.
- This will force an organisation to change the way it handles different situations.
Customers (Operating Environment)
- An organisation needs to be very responsive to changes in customer taste and preferences.
- This is so it can remain constantly competitive and satisfy customer needs.
Competitors (Operating Environment)
- New competitors entering a market can force an organisation to change.
- Organisations need to monitor the activities of their competition and determine what effect they may be having in the marketplace, as they may be changing their operations, improving their quality, implementing new market campaigns or increasing market share.
- Knowledge of such changes enables an organisation to make modifications to its existing business activities and to plan new ones.
Suppliers (Operating Environment)
- If the supplier is not able to deliver on time, deliver poor quality, or are found to have unethical practices, it can force change.
- It is important that an organisation have backup supplies available, making them less vulnerable to supplier difficulties.
Interest Groups (Operating Environment)
Interest Groups such as Trade Unions can put pressure on an organisation to alter its conditions of employment, safety procedures and wages.
Economic Forces (Macro Environment)
- Consumer confidence, exchange rates, interest rates and global economy are all factors that can pressure an organisation.
- After a period of prosperity, business activity gradually slows down until a recession (a contraction in the level of economic activity resulting in reducing spending, rising unemployment and a low rate of economic growth) or depression is reached.
Legal and Political Forces (Macro Environment)
- Changes in Government, funding and legislation can cause an organisation to change.
- Whenever new laws are passed, organisations must comply with the new legislative requirements.
Technological Forces (Macro Environment)
- New technologies that enter the market can force an organisation to adopt them in order to remain competitive.
- If it is slow to exploit technology, an organisation is likely to fail, because its competitors will strive to capture greater market share and develop a sustain a competitive advantage.
Social Forces (Macro Environment)
- Changes in society’s values put pressure on an organisation to change with them.
- For example, introducing an emissions trading scheme; aimed at reducing Australian’s greenhouse gas emissions. This emissions trading scheme regulates the buying and selling of permits to emit greenhouse gases.
Management (Driving and Restraining Force)
- Management that believe in the change and have the leadership qualities to drive the change can act as a Driving Force.
- However, if management has an autocratic management style or poor skills in being able to lead a change, a Restraining force can emerge.
Employees (Driving and Restraining Force)
- Employees, along with a positive culture (open communication with employees, teamwork), can help drive the change, creating a Driving Force.
- However, employees that feel the change is being forced upon then or fear the unknown can cause a major Restraining Force to the change.
Time (Driving and Restraining Force)
- Change can be a Driving force; organisations that are able to devote enough time to implementing the change will help support it. Also, the timing of the change in regards to the business environment may provide support.
- However, time can also be a Restraining Force. Organisations that do not have the time required to implement the change effectively could make it difficult to change. Also, the timing of the change in regards to the business environments may form resistance.
Competitors (Driving and Restraining Force)
- Competitors can act as a Driving Force for change; a lack of competition in a market as well as competitors setting precedence may be a driving force for an organisation to change.
- However, competitors can be a Restraining Force; if new competitors enter a market it may make it difficult to change if competitors etc.
Productivity (Driving and Restraining Force)
- Productivity can act as a Driving Force; if the change will result in improved productivity, it can provide support for the change. Also, if the impact on productivity is low during the implementation of the change, this could provide support.
- However, productivity can be a Restraining Force, if the impact on productivity is negative during the implementation stage or after completion, it can cause resistance.
Legislation (Driving and Restraining Force)
- Legislation may force an organisation to change, acting as a Driving Force.
- However, laws can sometimes make it difficult for an organisation to implement change as they must be complied with, acting as a Restraining Force.
Cost (Driving and Restraining Force)
- The cost of the change may be within the budget, allowing the organisation to run at a reduced cost, as a Driving Force.
- However, the change may cost a lot for an organisation, leading to perhaps to abandonment of the change, actin as a Restraining Force.
Two-way communication (Low-risk strategy)
- Being open and honest about the change so that employees fully understand it and its impact can help gain support.
- Answering questions about the change is also important.
- Maintaining open lines of communication also increases the level of trust among employees.
Participation and Teamwork (Low-risk strategy)
- Involving employees in the change process can help them get on board with the change.
- It is more difficult for them to resist decisions they have been part of making.
- The organisation should work with the employees and also identify individuals who can act as a support change agents
Support (Low-risk strategy)
- Those that are affected by the change need to be supported through the process.
- This could be done through training, counselling, support finding new employment etc.
- It is essential for employees leaving the organisation and for maintaining the morale of staff.
Training (Low-risk strategy)
- Involves the process of teaching staff how to do their job effectively by boosting their skills knowledge.
- Employees taking on different roles and duties need to be thoroughly trained to take on their new duties.
- Good training programs inspire confidence in staff that they will not be left behind in the process of change.
Negotiation (Low-risk strategy)
- Agreements that are struck between management and employees ensure support for change.
- Negotiation can also empower employees and enhance their support for the direction of change.
Manipulation (High-risk strategy)
- Manipulation is the act of gaining support from employees by the selective use of facts or deception.
- For example, an organisation introduced new technology and informs staff of the exciting new training and promotional opportunities that the change will provide. However, it may withhold the fact that the new technology will result in a number of forced redundancies.
- As it is deceptive and devious it is considered an unethical practice.
Threats (High-risk strategy)
- Forcing employees to embrace the change or retrieve retribution.
- Possible threats include retrenchment, loss of promotion, demotion, loss of working conditions etc.
- People may appear to be complaint on the surface but resentful underneath, leading to an increase in resistance, sabotage, grievance complaints, industrial disputes and compensatory claims for stress/harassment.
Cooptation (High-risk strategy)
- Cooptation involves the selection of an influential person among the potential resistors to be involved in the development and implementation of the change process.
- However, the role is symbolic and carries very little authority, that is they have very little input in the change process.
- It can backfire if the individual recognises what is being done and feels used.
A corporate code of conduct is a
set of ethical set of standards for mangers and employees to abide by.
The global economy is the
world economy and refers to the economic activity going on in the world. Consequently it is the total economic activity within and between countries.
A global manager
pursues organisational objectives in international settings and, therefore, is required to conduct business in numerous countries with different cultures.
Structural Change - Outsourcing
- Outsourcing is the contracting of some organisational operations to outside suppliers.
- Many LSOs outsource to keep labour costs at a minimum, contain its cost and survive in a global marketplace.
- Outsourcing may mean that local jobs will go; however, the positive impact is that the organisation may be able to produce goods and/or supply services more efficiently than before.
Structural Change - Flat Structures
- Middle management positions are abolished and therefore, greater levels of accountability and responsibility are transferred to frontline (lower) staff.
- These organisations are characterised by fewer formal reporting controls, sharing of best practice methods, learning focused on the organisation’s needs, a supportive learning environment and a focus on continuous improvement.
Structural Change - Work Teams
- Teamwork involves people who interact regularly and coordinate their work towards a common goal.
- Allows organisations to be more flexible and responsive.
- This helps motivate employees and generate more creativity, resulting in a broader view of goals and greater contribution across the entire organisation.
Impact on Corporate Culture
- For an organisation to survive in the long term, changes within the external and internal environments should be reflected in its culture.
- If organisational culture fits the external environment, managers and employees have the attitude they need to complete successfully.
Impact on HR Management
- Recruitment and selection must be altered to reflect the need for individuals who possess the knowledge and skills required to handle the changing circumstances.
- Appropriate termination procedures being established if employees are made redundant.
- Training must be offered to existing employees in the areas of teamwork, problem solving, decision making and change management.
- Performance appraisal and reward systems that reinforce the new behaviours must be put in place.
- Flexible working arrangements being made in order to attract and maintain skilled workers.
Impact on Operations Management
- Organisations refitting and reorganising their factories to take advantage of improvements in technology. They are also pursuing efficiencies in process design and materials management.
- Flexible Manufacturing: production by computer-controlled machines that can adapt to various versions of the same operations. This allows production plants to be smaller, more specialised, and closer to important markets.
- Emphasis on quality assurance - an organisation-wide system of procedures to ensure that the products satisfy consumers. This includes quality control, coupled with total quality management.
